Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto U.S. Fuel Economy: State of the Industry Erin Sunde Industry Analyst

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Indexing the Industry WardsAuto Fuel Economy Index Consumer trends Window-sticker (adjusted) MPG WardsAuto CAFE Performance Index Manufacturer progress toward federal regulations Unadjusted MPG

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto WardsAuto Fuel Economy Index Shows directional change in the fuel economy of new light vehicles with comparative views across key factors of the market Provides insight on consumer behavior in relation to fuel economy. A weighted MPG figure for each model is derived from EPA-published city/highway combined MPG and WardsAuto’s factory-installation rates. Those figures are matched to monthly U.S. light-vehicle sales figures to calculate the average fuel economy rating for that period.

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto WardsAuto Fuel Economy Index 1.Whole-market overview 2. Key MPG ranges  Manufacturer offerings versus consumer demand 3. Power: gas, diesel, hybrid, plug-in, electric  Sales trends and influences 4. Vehicle types and segments  Market share and power-type changes within segments

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Fuel Economy Index Overview 2015 showed the smallest improvement with a 0.7% gain to 25.3 MPG

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Market Share By Index Rating In 2015, the two highest ranges lost share and the range gained favor for the first time

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Market Share & Availability By Index Rating <15 MPG Primarily high-utility models - purchased for specific needs, not fuel efficiency Lowers manufacturers’ CAFE rating, but highly profitable

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Market Share & Availability By Index Rating MPG Utility or luxury vehicles Fewer models offered, but % sales held steady based on necessity

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Market Share & Availability By Index Rating MPG Many cars transitioned out of this range, but CUVs have kept the numbers high

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Market Share & Availability By Index Rating MPG Most popular in 2015 with fewer models available than the range Largest variety of cars and small utility vehicles

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Market Share & Availability By Index Rating MPG Higher availability of gas models allowed market share to grow Low gas prices steered shoppers to larger, less-efficient models

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Market Share & Availability By Index Rating 40+ MPG High ticket prices and charging concerns kept sales low, even as the number of models increased greatly

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto 2015 Light-Vehicle Sales by % Power Type (Change from 2014) Diesels, hybrids and plug-ins lost market share to gasoline-powered vehicles in 2015

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Gasoline Never below 94% on the market, gasoline-powered vehicles are the most significant power type on the index

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Cost Per 100 Miles Driven Gasoline Low gas prices in 2015 brought fuel cost well below average

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Fuel Economy Index & Price of Gasoline 3-Month Rolling Average High correlation between high gasoline prices and increased sales of higher-MPG vehicles

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Diesel Index rating fluctuates with favored vehicle mix

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto g CO 2 / gallonFEI MPGg CO 2 / mile Gasoline8, Diesel10, Diesel vs Gas14.5%28.0%-10.5% Diesel: Emissions

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Hybrid Sales fell as higher fuel economy was not worth the higher price for many Toyota Prius sales down 7%. Top 15 hybrids below year-ago

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Hybrids: Worth It? Ticket Price Premium Fuel savings Per Year* Years to Recoup Price Small Car$6,700$38018 Middle Car$4,200$39011 Luxury Car$9,700$45022 Cross Utility$7,900$28028 All$7,600$39019 *$2.52/gallon; 13,476 miles/year FEI MPG GainPrice PremiumPreference Small Car50%30%1% Middle Car44%18%6% Luxury Car41%18%10% Cross Utility22%18%3%

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Plug-in Hybrid Despite more models in the market, PHEVs saw first downturn in 2015 Top-seller Chevrolet Volt slipped 18% from 2014

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Electric EVs were the only alternative power to buck the downward trend Sales of Tesla Model S up 57%, Nissan LEAF down 43%

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Light Vehicle Market Share by Vehicle Type Record-high truck penetration at the end of 2015 led to lowest FEI gain

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Cars Improvements sway with fuel price’s effect on alternative-power demand

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Small Cars Losing market share since 2012, but most popular car segment in 2015

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Small Cars Power Type Electric vehicle sales supported by ZEV mandates

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Midsize Cars A steep drop in market share brought this segment below small cars in 2015

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Midsize Cars Power Type Share of all alternative power types fell in this segment in 2015

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Large Cars Lowest rated and least popular car segment

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Large Cars Power Type Less than 0.2% of large cars were hybrids at the 2014 peak

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Luxury Cars Index rating surpassed LV average in 2014 and 2015 Consumers more accepting of technology cost

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Luxury Cars Power Type Only electric vehicles rose in 2015

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Light Trucks High share of CUVs outweighed growth in heavier segments, accelerating FEI improvement

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto CUVs Market share increased as consumers moved away from cars Growth greatest for small models in 2015

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Following industry trend, alternative power lost favor in 2015 CUVs Power Type

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto SUVs Market share at historic lows, but low gas prices caused small gains.

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto SUVs Power Type Hybrids discontinued; diesels yet to catch on

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Vans Includes small and large passenger vans, large cargo vans excluded Least popular light-truck segment, but improvements still needed

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Diesel increased with sales of large vans Vans Power Type

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Pickups Market share growing since 2013, growth in all sub-segment sizes in 2015 Fuel economy improvements need to keep up with growing demand

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Diesel growing as OEMs balance CAFE regulations and power Pickups Power Type

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto WardsAuto Fuel Economy Index Low gas prices and positive economic conditions moved automobile buyers to less-efficient models High-efficiency vehicles are increasingly available, but slowly adopted by consumers Incentives needed to encourage sales of alternative power (e.g. electric vehicles sales boosted in ZEV states) Diesel power was the most successful alternative power source in the light-truck segments

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto WardsAuto CAFE Performance Index Shows manufacturers’ current model-year fuel economy progress in relation to CAFE goals. Factors vehicle specifications, footprint and related CAFE mandate targets. An MPG figure for each model is derived from EPA unadjusted city/highway-combined MPG and WardsAuto’s factory-installation rates. Those figures are matched to model-year production for the U.S. market.

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto WardsAuto CAFE Performance Index 1.CAFE regulation summary 2.Results for whole market 3.Results by segment 4.Manufacturer results and next steps in strategy

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Calculating CAFE MPG Target: Car and Light Truck Classification At least one: Transport more than 10 people Temporary living quarters Open bed Greater cargo-carrying than passenger-carrying volume 3-row seating with seats that can be removed or stowed to create flat cargo- carrying surface At least one: 4-wheel drive Gross vehicle weight greater than 6000 pounds Four: Approach angle ≥ 28° Ramp break-over angle ≥ 14° Departure angle ≥ 20° Running clearance ≥ 20 cm (7.9 in) Front & rear axle clearance 18 cm (7.1 in) AND OR Light Truck qualification:

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Pickuptrucks.com Calculating CAFE MPG Target

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto U.S. Federal Register Vol. 77 Num. 199 CAFE MPG Targets

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto CAFE MPG Targets MPG targets are based on vehicle footprint - larger footprints require lower MPG Cars and light trucks have separate MPG targets – higher for cars than light trucks MPG-target lines rise each model year

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto CAFE Performance Index Overview The market average needs to increase 52% to meet 2025 goal Based on 2015 market, the 2025 target is 47.7 – down from the 54.5 calculation from 2012, due to higher truck penetration in current market

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto CAFE Performance Index Overview WardsAuto Segmentation Small and midsize cars are closest to 2025 target Pickups have low MPG rating, but have low requirement with big size Market Average: 52%

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Sales Forecast By Segment The top 4 segments will account for over 80% of sales in 2023 Small car, midsize car and pickup are top-performing and in the top-selling group

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto CAFE Performance Index Overview

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Nissan Improvement to meet 2025 Target: Car35% Light Truck46% Total39% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Nissan Next-generation LEAF EV in development Nissan Rogue hybrid for ‘16 Infiniti Q50 gets 2.0L turbo 4-cyl. engine Nissan Rogue Hybrid

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Honda Improvement to meet 2025 Target: Car45% Light Truck46% Total45% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Honda 1.5L turbo I-4 in '16 Civic, expanding use in the future 10-speed automatic for V-6 cars (2018+) Next-gen Clarity fuel-cell vehicle later this year in California New plug-in hybrid (based on the Clarity platform) by 2018 Honda Clarity

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Toyota Improvement to meet 2025 Target: Car42% Light Truck63% Total50% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Lexus LC 500h new hybrid with CVT and 4-speed automatic for sporty driving and improved fuel economy New RAV4 hybrid promises compact-car-like mileage in a CUV Direct-injection 2.0L turbo I-4 expanded to more of model lineup Mirai fuel-cell car in California Toyota Toyota RAV4 Hybrid

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Ford Improvement to meet 2025 Target: Car57% Light Truck46% Total51% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Schaeffler testing 48-volt hybridization in concept vehicles including C-Max (hits 2025 fuel-efficiency target) Updated Ford Focus EV with higher range and faster charging Ford F-150 expected to gain a diesel engine option Ford Ford C-Max 48V

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Hyundai-Kia Improvement to meet 2025 Target: Car50% Light Truck57% Total52% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Hyundai Ioniq (Prius challenger) with hybrid, plug-in hybrid and pure-electric variants Kia to offer hybrid based on the Ioniq platform called Niro Hyundai-Kia Hyundai Ioniq

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto BMW Improvement to meet 2025 Target: Car57% Light Truck49% Total55% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Plug-in “eDrive” variants of all models within a few years eDrive X5, 3-Series and 7-Series joining lineup this year Carbon-fiber construction in i3, i8, 7-Series and more to come BMW BMW X5 eDrive

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto General Motors Improvement to meet 2025 Target: Car61% Light Truck51% Total55% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto General Motors Chevrolet Malibu hybrid variant for MY ’16 Chevrolet Bolt EV coming in MY ’17 Cadillac CT6 features lightweight construction and 2.0L turbo I-4 Revised eAssist mild-hybrid technology in Silverado and Sierra (CA) ZF TRW to supply vacuum-free braking for next-gen full-size pickups and SUVs (2018) Chevrolet Bolt

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Volkswagen Improvement to meet 2025 Target: Car56% Light Truck55% Total56% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Volkswagen Revised VW Up! to offer higher-output 1.0L direct-injection turbo 3-cyl. engine Audi has a 48-volt system, a fuel-cell CUV and plug-in hybrids in development Audi A3 e-tron

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto FCA Improvement to meet 2025 Target: Car69% Light Truck58% Total61% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto FCA Chrysler Pacifica minivan (replaces Town & Country) is lighter than its predecessor with aluminum, magnesium and high- strength steel used to cut weight Pacifica plug-in hybrid to join lineup Chrysler Pacifica

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto Daimler Improvement to meet 2025 Target: Car74% Light Truck70% Total73% 2015 Vehicle-Type Market Share

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto March 2015: “Ten new plug-in hybrids by 2017” S-Class, C-Class and GLE available; GLC and E-Class next Fuel-cell GLC in development for ‘18 Daimler Mercedes C 350 Plug-in Hybrid

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto For more information...  WardsAuto Green Strategies Report U.S. sales forecast, product plans and assessments of OEM strategies to meet 2025 U.S. fuel economy mandates  WardsAuto Fuel Economy Index: State of Industry 2016 In-depth analysis of Fuel Economy Index results  WardsAuto.com subscribers Monthly summary updates of the Fuel Economy Index and related news For more information on these services, please contact: Lisa Williamson, ,

Fuel Economy State of the Industry Erin Sunde, Industry Analyst, WardsAuto U.S. Fuel Economy: State of the Industry Erin Sunde Industry Analyst

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